Glossary of electricity terms

Apr 1, 2016


Affiliate Electricity Provider
The affiliate electricity provider was part of the original electric company that generated and sold electricity in your area. Now, the affiliate electricity provider only sells electricity and provides customer service.

An entity registered with the Public Utility Commission (PUC) that brings together a group of customers to buy electricity in bulk.

Average Payment Plan
An agreement worked out between an Electricity Provider and a customer that allows you to pay approximately the same amount for your electric service each month. All Electricity Providers are required by the PUC to offer average payment plans.


City-Owned Utility
A non-profit utility that is owned and operated by the city it serves. In Texas, city-owned utilities may opt into the competitive retail electric marketplace. See also “Municipally Owned Utility.”

Commercial Customer
One of three commonly used designations for classes of customers. The others are residential and industrial. Commercial customers are not involved in manufacturing. Examples of commercial customers are retail stores, restaurants and educational institutions.

Competitive Electricity Provider
An electricity provider that is certified by the PUC and competes for your business by offering lower prices, renewable energy options, added customer service benefits or other incentives.

Adding charges to a bill without a customer’s approval. This practice is illegal and penalties are enforced by the PUC.


Removal or relaxation of regulations or controls governing a business or service operation, like utilities.

Do Not Call List
The PUC has established two No-Call Lists for customers who do not want to receive telemarketing calls from electricity providers or other telephone marketers doing business in Texas.


Electric Reliability Council of Texas (ERCOT)
The corporation that administers and maintains the reliability of the state’s electrical power grid. When you choose a new electricity provider, this group will send you a postcard confirming your switch from one electricity provider to another.

Electricity Facts Label
An information sheet required by the PUC that provides customers with standardized information on a retail electric provider’s prices, contracts, sources of power generation and emissions. It allows customers to make an “apples-to-apples” comparison of electric provider offers.


Fuel Factor
An affiliate electricity provider is allowed to recover its costs for the fuel used to generate electricity, such as coal, natural gas, wind, water, nuclear, etc., through the fuel factor. This cost is set by the Public Utility Commission of Texas and charged on each customer’s bill, based on kilowatt-hour (kWh) usage. An affiliate electricity provider is prohibited from making a profit on fuel costs because they only sell electricity and does not generate it.


The production of electricity. In Texas, electricity is produced by a number of methods, including natural gas, coal, nuclear power, wind, water and solar energy.


Industrial Customer
One of three commonly used classes of customers. The others are commercial and residential. Industrial customers typically have the highest demand for electricity. Examples of industrial customers are factories or manufacturing plants.


Kilowatt-Hour (kWh)
A unit of energy equivalent to one kilowatt (kW) of power expended for one hour of time. The amount of electricity you use each billing period is expressed in terms of a kilowatt-hour and is noted on your bill.


Local Wires Company
The company that transmits and delivers electricity to a customer’s home or business along the poles and wires (formerly a local electric utility). This company is still responsible for the maintenance and repair of these poles and wires and will respond to emergency power outages. Also known as the Transmission & Distribution Service Provider.


Municipally Owned Utility (“Muni”)
A non-profit utility that is owned and operated by the municipality it serves. In Texas, municipally-owned utilities may opt into the competitive retail electric marketplace. See also “City-Owned Utility.”


Peak Demand
The highest 15- or 30-minute demand recorded during a 12-month period.

Price to Beat
Residential and small commercial customers of the affiliate electricity provider receive a standard rate offering, or “Price to Beat” set by the Public Utility Commission. This rate is designed to give customers of the affiliate electricity provider a discount and allow competing Electricity Providers the opportunity to offer lower rates. The “Price to Beat” rate includes a six-percent rate reduction, adjusted for fuel prices. On Jan. 1, 2007, the price-to-beat legislation expired.

Provider of Last Resort
The Provider of Last Resort serves as the “back-up” provider when an electric company leaves the market for any reason. If this happens, customers may switch back to the affiliate electricity provider or choose another competitive electricity provider offering electric service in their area.

Public Utility Commission (PUC) of Texas
The state agency that is responsible for the regulation and oversight of electric and local telecommunication services in Texas. Under electric choice, the PUC regulates the delivery of electricity and enforces customer protections.


Renewable Energy
Electricity that is made from “environmentally friendly” fuel resources, such as wind, water, biomass or solar. It is sometimes referred to as “green” energy. Information on an electric company’s generation sources can be found on its electricity facts label.

Residential Customer
One of three commonly used customer classes. The other two are commercial and industrial. Residential customers include private households that utilize energy for such needs as heating, cooling, cooking, lighting and small appliances.

The reorganization of traditional monopoly electric service to allow operations and charges to be separated or “unbundled” into generation, transmission and distribution, and retail services. This allows customers to buy retail electric service from competing providers.

Retail Electric Provider
A company that sells electricity to customers. In Texas, all retail electric providers must be certified to do business by the Public Utility Commission of Texas. In deregulated markets, consumers can compare retail electric providers and choose the one they want.

Rural Electric Cooperative (Co-op)
A customer-owned electric utility that distributes electricity to members and that receives lower-cost financing through the federal government. In Texas, co-ops can choose to opt into the competitive retail market.


Switching electric service without a customer’s approval. This practice is illegal and penalties are enforced by the PUC.


Terms of Service
A contract between an electric company and a customer that outlines fees, length of service and other important information.

Texas Electric Choice
The public education program managed by the Public Utility Commission to inform Texans about their options in a competitive retail electric market.

Transmission and Distribution
The actual delivery of electricity over poles and wires to your home or business. These services are provided to you by your Transmission & Distribution Service Provider, which is responsible for maintaining the poles and wires, and responding to emergencies and power outages as always. The PUC still regulates transmission and distribution to ensure the safety and reliability of your electric service.


This is the amount of electricity you used during the billing period listed in kilowatt-hours (kWh). This will be listed on your electric bill as kWh used.


Your Rights As a Customer Disclosure
A document that informs you of your rights as mandated by the PUC. Electric companies must provide you with this disclosure.